What is the Deployment Process of ERP?
As part of the deployment process, the organization must perform various tasks, including:
- On-site installation
- ERP testing
Why must organizations know about the various ERP type of deployment? Depending on the deployment type, they know how to operate and maintain the installed ERP system and the associated costs. Next, let’s discuss the available ERP deployment types.
Three ERP Deployment Types
Organizations can deploy their ERP solution or system in the following three types of ERP deployment techniques, namely:
1. On-Premises ERP
Before the advent of the cloud platform, organizations could deploy their ERP system on their on-premises infrastructure. This means deploying ERP on their organization’s internal servers and infrastructure. On-premises ERP deployment means the organization must perform the entire ERP installation, configuration, and maintenance using its internal IT team.
Here are some of the pros and cons of on-premises ERP deployment. Let’s start with the pros:
A. Complete Control of the ERP System
With on-premises ERP, the organization has complete responsibility for the ERP solution. Hence, they can control the entire deployment. Alternatively, organizations can deploy the solutions with authorized ERP solution providers.
With on-premises ERP deployment, organizations can customize or modify the source code their ERP system for their business needs. Additionally, it’s easier to integrate the ERP system with their existing third-party applications.
On-premises ERP systems enable organizations to implement security measures to prevent future data breaches or attacks. It means organizations have complete control over their data security and implement the best measures to safeguard their ERP data and system.
Next, here are some of the cons of an on-premises ERP deployment:
A. High Implementation Costs
The main disadvantage of on-premises ERP is the high implementation cost, which makes it suitable only for large corporations. Only large companies can hire a team of ERP specialists to install and configure the ERP system. Additionally, organizations incur high costs for training their workforce to use the ERP system optimally. Additional charges include the high infrastructure and hardware costs required to run the ERP solution efficiently.
B. Data Security
While organizations are responsible for data security, they may lack the tools and protocols to prevent data breaches. ERP systems can be compromised despite the presence of a qualified IT security team.
C. Long Deployment Process
Depending on the complexity of the ERP solution, on-premises ERP can take a long deployment time. This could range from a few months to even a year or more. Delayed implementation means the organization cannot leverage ERP capabilities for the business benefit for that period.
2. Cloud ERP
Also known as SaaS-based ERP, Cloud ERP is the latest type of ERP deployment model where the ERP solution is hosted on an external cloud platform or offsite server. Instead of the organization, most of the ERP deployment and installation is performed by an external cloud solution provider.
Based on their needs, organizations can deploy their cloud ERP on either of the two platforms:
Public Cloud is completely owned and managed by the cloud service provider. In this case, organizations can sign up for public cloud services on a SaaS-based subscription model where they only need to pay for the services they utilize over a period.
Private Cloud is a privately-owned cloud computing platform dedicated to a single customer. Also known as the internal cloud, the private cloud combines the benefits of the public cloud with the control & security of the on-premises deployment.
Here are some of the pros and cons of the Cloud ERP deployment. Let’s start with the pros:
A. Faster Implementation
Cloud-based ERP can be implemented in a shorter period compared to on-premises ERP. This is because organizations do not have to spend their time and money performing the deployment, which the external cloud service provider takes care of.
B. Reduced Costs
Cloud ERP is more cost-effective than on-premises ERP. This is because organizations do not need to invest in expensive in-house servers and infrastructure – nor hire an experienced in-house ERP team. Service providers already have the necessary infrastructure to host the ERP solution, whether private or public cloud. Additionally, organizations do not need to spend money on maintaining or upgrading their ERP solution.
For small businesses and SMEs, cloud ERP provides the right scalability for their business growth. This means they can add more ERP users and functionality based on their needs instead of incurring high initial costs. Small enterprises can thus focus on growing their business operations without worrying about their supporting infrastructure.
D. Data Security
94% of organizations have reported improved cloud security– compared to on-premises implementation.
With cloud-powered ERP, data security is in the hands of the cloud service provider. ERP companies like SAP are better equipped to ensure data security thanks to their years of industry experience.
Next, here are some of the cons of a Cloud ERP deployment:
A. Limited Customization
To optimize the efficiency and productivity of their ERP systems, cloud ERP vendors have to perform regular updates and upgrades at least once every six months or a year. With every new upgrade, organizations can lose their ERP customization, which needs to be performed repeatedly after every significant update.
B. Higher Costs
Cloud ERP incurs lower upfront costs as compared to on-premises ERP. However, depending on the cloud vendor, organizations can incur higher subscription costs in the long run and may even spend more money across the entire ERP lifecycle.
3. Hybrid ERP
Also known as a two-tiered ERP, Hybrid ERP combines on-premises ERP and Cloud ERP. Some ERP applications and data are stored on-premises, and others on the cloud platform. Among its main benefits, the hybrid ERP deployment model allows companies to deploy their ERP initially on-premises and then move to the cloud model to manage their ERP costs and growing requirements.
The hybrid ERP model also enables organizations to extend limited cloud ERP functionality to avoid significant implementation delays.
Here are some of the pros and cons of the Hybrid ERP deployment.
Let’s start with the pros:
Organizations can choose what to implement on the cloud and on-premises with hybrid ERP. Additionally, hybrid ERP can work in the offline mode, meaning it does not need 24/7 Internet connectivity.
B. Cost Management
Hybrid ERP offers the best cost benefits of both Cloud and On-premises ERP. For instance, organizations do not need to invest in expensive in-house servers and infrastructure continuously. Similarly, they can keep their public cloud expenses under control.
Next, here are some of the cons of a Hybrid ERP deployment:
A. Higher Initial Costs
While hybrid ERP streamlines cost in the long run, organizations still have to spend more money in the initial deployment. Compared to other deployment models, organizations must invest more in their on-premises and cloud infrastructure.
B. Integration-Related Challenges
With hybrid ERP, users may be unable to work with cloud and on-premises ERP solutions. For example, organizations may prefer to store their critical data on-premises, thus making it inaccessible to public cloud ERP users.
The right ERP deployment model depends on the size of the business, organizational needs, and cost model. Additionally, you must select the right ERP implementation partner that can help you deploy your ERP system on any of these models.
Among the best implementation partners for SAP ERP for small businesses in India, Praxis Info Solutions has implemented successful ERP projects for customers across industry domains. Here is why we are rated among the top 6 SAP business companies in India.
Are you confused about which ERP deployment is right for your business? We can consult you. Contact us today with your requirements.